Could data breaches at some of the nation's largest retailers have a ripple effect on Visa?
It's the story shaking the retail world: tens of millions of credit cards getting hacked during the holiday season.
The big story, of course, is that as many as 110 million Target customers may have had their credit card information stolen during the busiest shopping time of the year. Speaking with CNBC's Becky Quick, Target CEO Gregg Steinhafel said that his company is taking responsibility for the breach:
"There's zero liability on their part and we're offering free credit monitoring to any guest that wants an additional peace of mind. Just as importantly, we want to make sure that our guests know that we're being accountable, responsible, and I'm personally very sorry that this whole event even happened."
But, Target was not the only place where thieves grabbed data. Neiman Marcus was also the target of hackers.
Yet Americans won't think twice before using their crdit cards to make purchases, according to John Stephenson, portfolio manager at First Asset Investment Management. He believes credit card companies like Visa and MasterCard won't see a decline in usage despite the pervasiveness of data theft this past holiday season.
"This is America we're talking about," says Stephenson in Toronto. "Of course they're not going to start using cash more frequently."
Stephenson sees the recent credit card trouble as a problem for retailers like Target and Neiman Marcus, not for processing companies like MasterCard or its larger rival, Visa.
"I don't think it'll make a bit of difference to the actual [processing] companies like Visa," says Stephenson. "Keep in mind Visa has got operating margins of 60%. It's come through regulatory hurdles over the last couple of years. It's got earnings-per-share growth of over 20%. This is a cash machine."
Stephenson foresees global economic growth as a major driver for Visa's earnings' growth ahead. For that reason, he's bullish on Visa.
"This is something you need to buy," says Stephenson about Visa's stock. "This is a company that you need to own."
(See: CNBC's Retail coverage)
Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, also believes Visa won't be affected by the holiday data breach.
"There is nothing in the long- or short-term technicals of Visa to suggest that the phenomenal run that we've seen in the stock is going to be threatened by these recent security concerns," says Ross.
For Ross, a major technical indicator for Visa is how the stock prices has moved relative to its 150-day moving average.
"This stock has been above its 150-day moving average for over two and a half years," says Ross. "That's extremely impressive."
As well, Ross sees Visa's stock as moving steadily in a very well-defined upward trend channel for the past couple of years. For that reason, Ross believes shareholders should continue to hold their positions and even add in any weakness.
"This is a stock that's going nowhere but up in the short- and intermediate-term," says Ross.
To see more of Stephenson and Ross on what's next for Visa as retailers grapple with the recent credit card security breach, watch the video above.
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